Sheep being herded by cattle dog

The shine has come off store sheep prices. After spending six months at historically extreme levels store lambs have eased in recent weeks, and some ewe prices have gone with them. Merino’s seem to be the worst affected, but Merino lambs are still making reasonable money.

After a spring and summer where restocker lamb prices haven’t come below 950ȼ in NSW, the impending winter has seen some heat come out of the market in recent weeks.  Figure 1 shows that last week the NSW Restocker Lamb Indicator fell to a six month low of 918ȼ last week and headed lower again this week.  Still a solid premium to trade lambs, but back from recent highs.

Traditionally restocker lamb prices track sideways in May and June.  This is despite the Eastern States Trade Lamb Indicator (ESTLI) usually rising.  The reason restocker lambs don’t rise with the ESTLI in winter is due to the imminent arrival of new season suckers out of NSW. 

With the ESTLI tracking sideways, restocker lambs have responded by falling.  There is only a limited time before old season lambs are discounted to the new crop, so prices are understandably falling.

Merino lambs are a reasonable indication of restocker demand, as merino supply and demand will fluctuate with seasons.  Figure 2 shows merino lamb prices haven’t really eased in line with restocker lambs, but it will be interesting to see if they can rally with the seasonal trend (figure 2).

We have also seen mutton prices ease in recent weeks, and this has been reflected in store sheep markets.  It might be getting a bit late in the season for many NSW producers to buy scanned in-lamb ewes.  Prices on AuctionsPlus have fallen by $10-30/head for scanned in lamb Merino and first cross ewes over the last two weeks. 

Sellers don’t like the new levels, with clearance rates between 30 and 40%.  These sheep will likely be offered again, so supply of ewes will be building. Obviously, the more store sheep which are backlogged, the closer prices get to mutton values.

What does it mean?

The dry autumn across much of Victoria, and the drier forecast for the winter, seems to have pulled some of the support for store sheep markets. There is also the question of what sheep and lambs will be worth when they come to be sold, with the spring holding plenty of uncertainty.

On the positive side rising cattle prices will put a floor under sheep prices, with plenty of areas still understocked if winter and spring rainfall comes somewhere near average.

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Key Points

  • Store lamb and sheep prices have eased in recent weeks as we approach winter and new season supplies.
  • The dry forecast might have helped remove some of the support for store ewes.
  • Strong mutton and store cattle prices should support store sheep values in the medium term.

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Data sources: MLA, Mecardo

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